Plaintiff v Defendant

1 On 26 March 2026, I published answers and reasons in respect of the preliminary questions stated by Daly AsJ on 2 October 2025[1] and invited submissions concerning consequential orders.

(a) senior counsel for the defendant endorsed the suggestion that the plaintiff's claim for economic loss and/or loss of earning capacity ought permanently be stayed;

(b) leading counsel for the plaintiff submitted that it was a 'pleaded case dispute' and that the relevant part of the pleading should simply be struck out.

(a) merely to strike out the relevant aspects of the pleading might, theoretically, leave open the prospect of some kind of repleading of that which I have determined to be an abuse of process;

(b) in any event, it is more appropriate to stay that which has been found to be a substantive abuse of process rather than merely to strike out its expression in a pleading;

(c) it follows that it will be ordered that the plaintiff's claim for economic loss and/or loss of earning capacity is permanently stayed.

5 Senior counsel for the defendant applied for the costs of the plaintiff's summons dated 14 August 2025 as well as the determination of the preliminary questions. That said, senior counsel sought a period in order to consider whether the defendant might seek a special order for costs and suggested an exchange of short written submissions.

6 Leading counsel for the plaintiff submitted that costs had been dealt with by an order made by Daly AsJ on 2 October 2025 and otherwise indicated that an exchange of short written submissions was appropriate.

7 In the circumstances, no orders were made giving effect to the answers to the preliminary questions, or in respect of costs, and an exchange of short written submissions was ordered.

8 The parties subsequently filed and served a sequence of written submissions.[2]

9 The defendant sought its costs of and incidental to the hearing of the preliminary questions on an indemnity basis. Among other things, it submitted that -

(a) the costs order made by Daly AsJ on 2 October 2025 reflected a 'two-step process' and was not intended 'to prospectively bind the parties';

(b) whether an order giving effect to the answers to the preliminary questions is final or interlocutory,[3] costs should presently follow the event;

(c) there have been several cases in which the Court has ordered that costs follow the event in respect of a hearing of preliminary questions;[4]

(d) the plaintiff's pursuit of the construction issue was misconceived, embarrassing and an abuse of process; and

(e) the defendant put the plaintiff on notice that it would seek 'any and all costs' in respect of the plaintiff's belated pursuit of the construction issue.[5]

10 In response, among other things, the plaintiff submitted that -

(a) Daly AsJ made 'comprehensive orders pursuant to a minute of consent, which provided for the manner in which the parties agreed costs ought be determined'[6] and it is not open to the defendant to submit otherwise;

(b) in that connection -

(i) on 1 October 2025, the parties signed a minute of proposed consent orders which, under the heading 'Hearing date and costs', stated 'Costs in the proceeding';

(ii) subsequently, on 2 October 2025, her Honour ordered, on the papers and by consent, a 'full timetabling of the preliminary questions' and that '[t]he parties' costs be their costs in the proceeding';

(iii) having drafted and signed the minute of consent orders, the defendant contemplated that costs would be in the proceeding if it succeeded on the preliminary questions, including question (B) directed to the issue of abuse of process;

(c) in the circumstances, the defendant's submissions amount to an application to amend an authenticated costs order that was not appealed and should be left undisturbed;

(d) even if the Court considers it to be appropriate to 'revisit' her Honour's costs order, the appropriate order is that the parties' costs of the preliminary questions be their costs in the proceeding;

(e) in that connection -

(i) the relevant order is interlocutory in nature;

(ii) in ordering the determination of preliminary questions, her Honour must have been satisfied that the determination would be of utility, economy and fairness to the parties;

(iii) question (B) arose upon the defendant's amended defence and the answers to questions (B), (C) and (D) serve to 'resolve pleaded issues';

(iv) the plaintiff agrees with submission of the defendant concerning the 'presumptive operation' of r 63.20 of the Rules, which means that 'the parties' costs of this interlocutory application be costs in the proceeding'; and

(v) the letter of the defendant's solicitor dated 31 July 2025 was overtaken by events.

11 With leave, the defendant filed one paragraph in reply which states -

The Plaintiff's submissions dated 7 April 2026 concerning the true effect of the 2 October 2025 orders miss some important context. The 1 October 2025 proposed consent orders, which led to the 2 October Orders, were agreed and provided to the Court in advance of a directions hearing listed for 3 October 2025. By email dated 25 September 2025, the Court directed that any consent orders be provided by 30 September 2025. On 1 October 2025, the parties provided signed consent orders to the Court. The Court then confirmed that appearances on 3 October 2025 would no longer be required, as the orders would be made on the papers if appropriate. Against that background, the Defendant submits that the costs order in the 2 October Orders was plainly intended to govern the costs of setting down the preliminary questions and any costs associated with the (scheduled but then abandoned) directions hearing scheduled for 3 October 2025, not the costs of the preliminary questions hearing itself (which was heard on 9 December 2025 and subsequently determined by reasons handed down on 26 March 2026). It would be very unusual for a judge to prospectively bind the parties to a costs order for a subsequent hearing. The Court should not reach that conclusion in this case.[7]

12 It will be evident that each party emphasised particular aspects of the underlying sequence of events.

13 In my view, the presently relevant sequence of events is as follows -

(a) the High Court delivered its judgment on 9 April 2025;

(b) on 16 May 2025, the solicitors for the plaintiff wrote to the solicitors for the defendant indicating that the plaintiff 'now intends to press his argument that the terms of the Deeds are such that the parties never contracted out of his right to pursue economic loss';[8]

(c) on 31 July 2025, the solicitors for the defendant responded referring, in particular, to the undisturbed orders of the Court of Appeal and thereafter stating that -

We put you on notice that should the Plaintiff attempt to re-agitate this issue and make any claim for economic loss, this correspondence will be relied upon and a cost[s] order will be sought against the Plaintiff for any and all costs associated with the re-agitation of this issue, including but not limited to the costs of any application for a preliminary determination of the question.[9]

(d) on 14 August 2025, the plaintiff filed a summons seeking orders that there be a separate trial of the construction issues and that the defendant pay the plaintiff's costs of the summons;[10]

(e) on 30 September 2025, the defendant filed an amended defence, which was amended in terms directed to the construction issues and included averments that the plaintiff's pursuit of those issues was, variously, res judicata, issue estoppel, Anshun estoppel and/or an abuse of process;[11]

(f) on 1 October 2025, the parties provided a signed minute of proposed consent orders to the Court that, under the heading 'Hearing date and costs', proposed 'Costs in the proceeding';[12]

(g) on 2 October 2025, on the papers and by consent, among other things, Daly AsJ -

(i) stated various questions for preliminary determination - particularly in respect of the construction issues as well as res judicata, estoppel, and/or abuse of process;[13] and

(ii) ordered that '[t]he parties costs be their costs in the proceeding';

(h) the hearing in respect of the preliminary questions took place on 9 December 2025;

(i) answers and reasons in respect of the preliminary questions were published on 26 March 2026;

(j) the defendant succeeded in respect of the construction issues and, among other things, the circumstances were found to be 'extreme, regrettable, unreasonable and embarrassing'[14] such that the plaintiff's intended pursuit of a claim for economic loss and/or loss of earning capacity was accepted as being -

... unjustifiably oppressive to the defendant and apt to abuse the processes of the court such that, if it were allowed to occur, the administration of justice would be brought into disrepute.[15]

14 Although both parties referred to r 63.20 of the Rules, I do not consider that rule to have any present application. While it may be accepted that the order made as a consequence of the Court's answers to the preliminary questions is interlocutory in character, the present instance is not one in which 'no order is made on the application' or in which the order made will be 'silent as to costs'.

15 More centrally, in my view, neither the circumstances leading to the provision by the parties of a signed minute of proposed consent orders to the Court nor the costs order made by Daly AsJ on 2 October 2025 serve to foreclose the present issue of costs.

(a) conventionally, a costs order in the form proposed by the parties means that the costs of, and associated with, the particular occasion are in the proceeding;

(b) I would not read the order ultimately made by her Honour as having any different meaning or effect; and

(c) more broadly, it is common for the words 'is' or 'are' and 'be' to be used interchangeably in such a form of order and I have never heard it said that an order in either form should be taken to foreclose any and all issues of costs into the future.

(a) costs issues are often affected by developments at hearing;

(b) in the present instance, the form of the stated preliminary questions presented the foreseeable prospect that, on the evidence, the plaintiff's endeavour might later be found to be a substantive abuse of process of the Court; and

(c) it is inconceivable that, on 2 October 2025, her Honour was intending to foreclose any and all future answers to the question of whether the plaintiff should be ordered to pay the costs of that endeavour if it were found to constitute a substantive abuse of process (which, in fact, occurred).

(a) the costs order made by Daly AsJ did not foreclose any present consideration of the costs of the determination of preliminary questions; and

(b) further, and specifically, I do not accept that -

(i) the defendant contemplated that the form of costs order to which it consented would stand to foreclose any and all future consideration of the costs of determining the preliminary questions;

(ii) it is not now open to the defendant to submit that the plaintiff ought to be ordered to pay the costs of the determination of preliminary questions; and

(iii) consideration and determination of the present issue involves any need to 'amend' or 'revisit' the costs order made on 2 October 2025.

19 Beyond that, as I have noted, it may be accepted that the order giving effect to the answers to the preliminary questions is interlocutory in character. However, it is equally plain that the Court may order that costs follow the event.

(a) the plaintiff essentially sought such an order in his summons dated 14 August 2025;

(b) that stance was undoubtedly adopted because the construction issues were discrete in nature and wholly tangential to the issues that would otherwise be presented at a jury trial;[16] and

(c) the same may be said in respect of what might broadly be described as the issues of abuse of process.

21 In that context, the consequence of the answers given by the Court in respect of the relevant preliminary questions is that -

(a) an entire area of controversy is disposed of;

(b) evidence relevant to the determination of the preliminary questions will not be admissible at trial;[17]

(c) nothing that subsequently occurs at trial could be said to justify the plaintiff's failed stance in respect of the preliminary questions; and

(d) accordingly, the apparent justice of the situation in respect of the matters arising from the determination of the preliminary questions cannot realistically be altered by subsequent events at trial.

22 In short, it is not a circumstance in which any future success of the plaintiff in the proceeding presents as likely to be sufficient to justify the costs incurred in respect of an earlier and discrete dispute that the Court came to accept was a substantive abuse of process.

23 In the circumstances, while I would not disturb the costs order made by her Honour on 2 October 2025, I am satisfied that the plaintiff should otherwise pay the defendant's costs of and associated with the determination of the preliminary questions.

24 The final issue is whether such costs should be ordered to be assessed on an indemnity basis.

25 In Chen v Chan (No 2), Maxwell P, Redlich JA and J Forrest AJA stated -

... an order for costs on a ... indemnity basis may be made where special or unusual circumstances have been demonstrated, for example, by establishing misconduct in the proceeding, that the proceeding was brought for an ulterior purpose, or that it was patently unreasonable to institute, or maintain, the proceeding. Special circumstances may also include the making of an allegation of fraud which is not proved.[18]

(a) such an order is a departure from the usual course;

(b) the categories are not closed; and

(c) the question is always whether the facts and circumstances warrant the making of an order for payment of costs other than on a standard basis.[19]

27 In Macedon Ranges Shire Council v Thompson, particularly in respect of cases without reasonable prospects of success, Redlich JA and Beach AJA stated -

... where the litigant did not recognise that its case was without merit a court may be disinclined to make a special costs order. The Court must measure the litigant's conduct against the facts then known or which ought to have been known, the inquiries that the litigant ought reasonably to have made and the legal advice which the litigant ought reasonably to have obtained.[20]

28 In the present instance, the defendant particularly emphasised that -

(a) the plaintiff's conduct was 'extreme, regrettable, unreasonable and embarrassing' and constituted an abuse of process;

(b) the plaintiff's conduct also caused significant delay and inconvenience; and

(c) in a letter dated 31 July 2025, the defendant had referred to the history of the proceeding (including the orders made by the Court of Appeal) and put the plaintiff on notice that it would seek 'any and all costs'.[21]

(a) nothing about the manner in which the present points were argued suggested to me that the plaintiff's representatives were actually conscious that their endeavour could be and was an abuse of process;

(b) at the same time, their approach did not strike me as wholly cavalier;

(c) whilst not strong, the construction points, at least, might be said to have been arguable; and

(d) while the letter of 31 July 2025 referred to some relevant events and to 'any and all costs', it did not articulate and draw attention to circumstances identified as 'special' or state, specifically, that it would subsequently be submitted that an order should be made for costs on an indemnity basis.

30 In the circumstances, I am not satisfied that an order should be made that departs from the usual course.

31 In light of the above, these reasons will be accompanied by orders to the following effect -

1. The plaintiff's claim for economic loss and/or loss of earning capacity is permanently stayed.

2. While the costs order made by Daly AsJ on 2 October 2025 should stand undisturbed, the plaintiff must otherwise pay the defendant's costs of, and associated with, the determination of the preliminary questions on a standard basis to be assessed by the Costs Court in default of agreement.

[1] DZY v Trustees of the Christian Brothers (No 2) [2026] VSC 144 ('DZY (No 2)').

[2] Defendant's written submissions as to costs of the hearing of the preliminary questions dated 31 March 2026 ('Defendant's submissions'); Plaintiff's written submissions as to costs of the determination of preliminary questions dated 7 April 2026 ('Plaintiff's submissions'); Defendant's supplementary written submissions as to costs of the hearing of the preliminary question dated 8 April 2026 ('Defendant's supplementary submissions').

[3] As to which, the defendant referred particularly to O'Connor v Trustees of the Christian Brothers [2024] VSC 708; Supreme Court (General Civil Procedure) Rules 2025 (Vic), r 63.20.

[4] The defendant referred particularly to Ambridge Investments Pty Ltd (in liq) v Baker & Ors [2020] VSC 534; Re Lifestyle Residences Hobsons Bay Pty Ltd [2023] VSC 179; Cassar v Cassar [2024] VSC 537; Frontlink v Feldman (No 2) [2017] VSC 9.

[7] Defendant's supplementary submission (n 2) (citations omitted).

[12] Plaintiff's submissions (n 2) 2 [4(g)].

[14] DZY (No 2) (n 1) 36-7 [124(b)(i)].

[16] The plaintiff's amended writ dated 23 August 2021 identifies the mode of trial as 'Judge and Jury': JCB 79.

[17] It will be implicit that I reject the submission of the plaintiff that the preliminary questions, including question (B), were determined merely on the pleadings.

[18] [2009] VSCA 233, 4 [10(7)] (citations omitted). See also Ugly Tribe Co Pty Ltd v Sikola & Ors [2001] VSC 189, [7]-[8].

[19] Macedon Ranges Shire Council v Thompson [2009] VSCA 209, [13]-[14] ('Macedon Ranges'). See also, Banksia Securities Ltd v Insurance House Pty Ltd (Costs) [2020] VSC 234, [15]-[16].

[20] Macedon Ranges (n 19) [15] (citations omitted).

[21] Defendant's submissions (n 2) 6 [24].