Plaintiff v FLINDERS STOKIE PTY LTD

1. This ruling concerns the costs order to be made in this proceeding ('Winding Up Proceeding') following a notice of discontinuance being filed by the plaintiff on 14 August 2025.
2. The plaintiff seeks orders that the costs of the Winding Up Proceeding be costs in the cause of proceeding S ECI 2025 03998 ('Trust Proceeding'), or alternatively, each party in the Winding Up Proceeding bear their own costs. The plaintiff relied on:

(a) counsel's written outline of submissions filed with the Court on 17 December 2025 and the affidavits referred to therein, being the affidavits of:

(i) Tobias John Tucker filed 4 December 2024 in the Winding Up Proceeding;

(ii) Michael John Stokie filed 9 December 2024 in the Winding Up Proceeding;

(iii) Brenton Stokie filed 4 February 2025 in the Winding Up Proceeding;

(iv) Michael John Stokie filed 15 July 2025 in the Trust Proceeding; and

(v) Guilio Marra filed 7 August 2025 in the Trust Proceeding.

1. The defendant seeks its costs of the Winding Up Proceeding on an indemnity basis. The defendant relied on counsel's written outline of submissions filed with the Court on 8 December 2025 and on 22 December 2025 and the affidavit referred to therein, being the affidavit of Michael Stokie filed 7 August 2025 in the Trust Proceeding.
2. For the reasons that follow, I have determined that it is appropriate that the plaintiff pay the defendant's costs of the Winding Up Proceeding on a standard basis from the commencement of the Winding Up Proceeding to 15 July 2025 and thereafter on an indemnity basis.

1. The defendant is trustee of the Flinders Stokie Trust ('FS Trust'). The beneficiaries of the FS Trust are members of the Stokie family, including the plaintiff and his children, Brenton, Luke and Sharna. Brenton and Luke are the directors of the defendant.
2. The trust property was real property (since sold) at 6 and 8 Panton Road Flinders, Victoria 3929 ('Properties'). The sale proceeds are presently held in the defendant's solicitors' trust account, pending further Court order.
3. The Winding Up Proceeding was commenced on 4 December 2024 and was founded on the alleged non-compliance by the defendant with a creditor's statutory demand for the sum of $1,232,672.47, issued by the plaintiff and dated 30 October 2024. In issuing the statutory demand, the plaintiff deposed to the existence of an unsecured debt owed to him by the defendant. The relief sought by the plaintiff in the Winding Up Proceeding was the appointment of a liquidator to the defendant, for the purpose of an insolvent winding up. Effectively, the plaintiff sought the forced sale of the Properties in a liquidation scenario, so as to satisfy the alleged debt.
4. On 3 February 2024, the defendant filed grounds of opposition to the Winding Up Proceeding. These grounds were: solvency; genuine dispute relying on s 459S of the Corporations Act 2001 (Cth) ('Act'); abuse of process; an asserted defect in service of the statutory demand; and a ground that the proceeding was filed prior to the expiration of the statutory demand.
5. On 9 April 2025, the Winding Up Proceeding was set down for hearing, and a timetable for the filing of evidence was fixed.
6. In the context of those procedural steps, the following correspondence was exchanged between the parties' solicitors:

(a) on 16 December 2024, the defendant's solicitor wrote to the plaintiff's solicitor outlining the basis upon which it asserted it had strong grounds to resist the Winding Up Proceeding;

(b) the same day, the plaintiff's solicitor issued a settlement offer, in the following terms:

(i) within 14 days of acceptance, the plaintiff would assume responsibility for the 'La Trobe Mortgage' and all future obligations associated with it;

(ii) within 21 days of acceptance, the defendant was to cooperate to facilitate the plaintiff assuming control of the FS Trust;

(iii) within 45 days of acceptance, the FS Trust's properties, assets, and liabilities would be independently valued and assessed to determine the amount of any equity in the trust;

(iv) within 12 months of that valuation and assessment, an amount equal to two-thirds of the assessed equity in the FS Trust (if any) will be paid to the defendant and two of his children, Luke and Brenton;

(v) contemporaneously with that payment, the defendant, Luke and Brenton were to be removed as beneficiaries of the FS Trust; and

(vi) upon execution of formal terms reflecting this agreement, the plaintiff will discontinue the Winding Up Proceeding;

(c) on 20 December 2024, the defendant's solicitor responded with a counter-offer which sought to resolve the underlying dispute concerning the control of the FS Trust, and the Properties, and stated in relation to the Winding Up Proceeding:

...With respect, the matters raised in [the 16 December 2024 email] plainly deserve a response as it is clear that the Proceeding should not have been brought and should be dismissed immediately. It is now abundantly clear that the Proceeding has not been brought in relation to the solvency of Flinders Stokie, particularly in view of Michael Stokie linking the Proceeding and claims in relation to the Flinders Stokie Trust in the Offer.

(d) on 21 March 2025, the plaintiff's solicitor wrote to the defendant's solicitor requesting that the defendant undertake not to sell the Properties and asserting that because of the fact of the Winding Up Proceeding:

(i) the defendant was now ineligible to hold the office of trustee of the FS Trust;

(ii) the defendant did not have power to sell the Properties; and

(iii) trust instruments going to the control of the FS Trust, executed in October 2022, were invalid; and

(e) on 28 March 2025, the defendant provided its response which, in relation to the Winding Up Proceeding and proposed sale of the Properties, stated, relevantly:

For the avoidance of doubt, Flinders Stokie will not be providing the undertaking requested in your letter and will continue with the sale of the Properties.

...

The matters raised in your letter supports Flinders Stokie's position that the Proceeding is an attempt by your client to take control of Flinders Stokie and the Flinders Stokie Trust and thereby the Properties. The Proceeding is an abuse of process.

1. On 3 June 2025, the Properties were sold, with settlement due to be completed by 4 August 2024.
2. On 15 July 2025, the plaintiff, Flindstoke Truetrus Pty Ltd (ACN 687 686 380) ('Flindstoke') and other related entities commenced the Trust Proceeding in which they seek declaratory relief in respect of various trust deeds, including relief which seeks to remove the defendant as trustee of the FS Trust and appoint Flindstoke to that role. The relief sought includes:

(a) a declaration that on 18 June 2025, the plaintiff removed the defendant as trustee of the FS Trust, and appointed a new corporate trustee, Flindstoke, a company wholly controlled by the plaintiff; and

(b) that the property of the FS Trust, be transferred from the defendant to Flindstoke.

1. By the Trust Proceeding, the plaintiff alleges that trust documents which Luke and Brenton caused to be executed, that have the effect of retiring the plaintiff from his role as the appointor and guardian of the FS Trust, and which purport to appoint Luke and Brenton to those roles, are wholly invalid. Flindstoke says it is the trustee of the FS Trust, a matter which the defendant disputes.
2. On 21 July 2025, in light of the Trust Proceeding, the plaintiff's solicitor sent a further letter to the defendant's solicitor proposing that the Winding Up Proceeding be stayed pending the determination of the Trust Proceeding. That letter also put the defendant on notice that it was the plaintiff's position that:

(a) the defendant ought to be restrained from dealing with any assets of the FS Trust;

(b) the defendant did not have the plaintiff's authority to exercise any powers in connection with the FS Trust; and

(c) the defendant was not to rely upon the assets of the FS Trust for the purposes of establishing its solvency in the Winding Up Proceeding.

1. On 31 July 2025, the defendant's solicitor responded proposing that the Winding Up Proceeding should be discontinued, and that the plaintiff's position as plaintiff in each proceeding was fundamentally inconsistent.
2. On 4 August 2025, Flindstoke lodged caveats over the Properties.
3. On 6 August 2025, the defendant commenced proceeding S ECI 2025 04469 in the Supreme Court of Victoria for the removal of those caveats ('Caveat Proceeding').
4. On the same day, the plaintiff, Flindstoke and other related entities filed cross-applications seeking to injunct the removal of the caveats and the completion of the sale of the Properties. In the context of that application, the plaintiff deposed that the Properties were significant to him, and that damages would accordingly not be an adequate remedy. This was notwithstanding that in the Winding Up Proceeding, the plaintiff sought the forced sale of the Properties in a liquidation scenario.
5. On 7 August 2025, Matthews J heard competing applications from the parties being the plaintiff and Flindstoke's injunction and the defendant's caveat removal so that settlement of the Properties could proceed. The defendant's application to remove the caveats was granted with costs. The plaintiff and Flindstoke's application to injunct the sale of the Properties was refused with costs in the cause.
6. By its written submissions, the defendant asserted that Matthews J ordered that conditional on the plaintiff proffering an undertaking to discontinue the Winding Up Proceeding within 7 days, the proceeds of the sale of the Properties be preserved.
7. Conversely, by its written submissions, the plaintiff asserts that on the basis the contract of sale for the Properties was entered into with an arm's length purchaser, the Court ordered that settlement proceed and that the proceeds of sale be quarantined pending agreement or further orders of the Court.
8. The Winding Up Proceeding was subsequently discontinued on 14 August 2025.

1. The Court has a wide discretion in relation to costs.[1]
2. The discretion is absolute, unconfined and unfettered, but must still be exercised judicially and upon facts connected with the litigation, not by reference to irrelevant or extraneous considerations.[2]
3. Although not designed to control the exercise of the Court's discretion, there is a general rule that, in the absence of good reason to the contrary, a successful litigant should recover their costs,[3] however each case will turn on its own facts.
4. Rule 63.15 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic) ('Rules'), states, relevantly, and in respect of discontinued proceedings:

Unless the Court otherwise orders, a party who discontinues...a proceeding... shall pay the costs of the party to whom the discontinuance or withdrawal relates to the time or the discontinuance of withdrawal.

1. In Edwards v Hyundai Motor Company Pty Ltd,[4] the Court of Appeal endorsed the approach taken by Derham AsJ in Soteriadis v Nillumbik Shire Council[5] where his Honour summarised the principles applicable to costs upon a discontinuance of a proceeding as follows:

(a) the rule does not give rise to a presumption that costs will be ordered against the discontinuing party;

(b) however, the rule does create a starting position for the plaintiff or discontinuing party to pay the defendant's costs, subject to a contrary order;

(c) the contrary order itself involves a discretionary decision to be exercised judicially. If there is to be a departure from the starting position, it should be done in a particularised, and principled way. The Court is required to make such order as it thinks just in the particular circumstances of the case;

(d) the burden is on the party who seeks to persuade the Court that a contrary order should be made. If facts are to be relied upon to found the Court making a different order, the plaintiff will bear the onus of proving the relevant facts;

(e) all the relevant circumstances, and not just the fact of discontinuance, should be considered. This may include a consideration of the whole of the proceedings. Generally the discretion will be exercised on the basis of the objective circumstances established on the evidence and not involve the subjective considerations of one party;

(f) a relevant consideration is whether the plaintiff acted reasonably in commencing the proceedings and whether the defendant acted reasonably in defending them. It might also be appropriate for the Court to consider the conduct of the defendant prior to the commencement of the proceedings where such conduct may have precipitated the litigation;

(g) generally there must be some proper justification, sound positive ground, or a good reason, for departing from the starting position. The reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs, so for example, it may be appropriate to make a contrary order:

(i) where the proceedings have been rendered unnecessary by circumstances beyond the plaintiff's control;

(ii) where the plaintiff achieved practical success in the proceedings;

(iii) where costs have been significantly increased by the unreasonable conduct of the defendant;

(h) where the proceedings are discontinued prior to any hearing on the merits, usually it will be impracticable to assess the eventual prospects of success in the action and the Court cannot try a hypothetical action between the parties to determine the question of costs;

(i) there is a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event, or settlement, so removes, or modifies, the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case that usually creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs; and

(j) where the proceedings are discontinued after interlocutory relief has been granted, the Court may take into account the fact that that interlocutory relief has been granted.[6]

1. Where an award of costs is made, it is usually ordered on a standard basis unless there are special or unusual features warranting an order for costs on an indemnity basis.[7] Such circumstances include where:

(a) a proceeding is commenced or continued in disregard of known facts or clearly established law;[8]

(b) there is unreasonable conduct causing unnecessary costs to be incurred;[9]

(c) a party, properly advised, knew or should have known that it had no chance of success and persisted with its claim (in other words, the proceeding was brought on the basis that the case advanced was hopeless);[10] and

(d) a defendant raises issues that could not succeed in establishing a defence and the proceeding was entirely unnecessary.[11]

1. The plaintiff contended that the Court ought to make a costs order that the costs of the Winding Up Proceeding are costs in the cause of the Trust Proceeding or alternatively, that each party bear their own costs in the Winding Up Proceeding.
2. The plaintiff submitted that this is the appropriate course for the following four reasons and that such an order would ensure that neither party was unfairly prejudiced in respect of the Trust Proceeding where the Court can make orders in respect of costs once the dispute, the subject of the related proceeding, is finally determined:

(a) first, an objective analysis of the circumstances in which the Winding Up Proceeding was discontinued evidences that the defendant took conscious steps to disrupt and render the Winding Up Proceeding futile. The dispute is now litigated in an alternate 'battleground', where the plaintiff prosecutes the defendant to obtain relief that inter alia, pertains to the Winding Up Proceeding;

(b) second, to make the order as proposed by the plaintiff is consistent with the ex tempore judgment of Mathews J and her Honour's orders that costs be in the cause of the Trust Proceeding. To make orders that the plaintiff pay the defendant's costs in the Winding Up Proceeding in the circumstances is tantamount to punishing the plaintiff for acting responsibly in accordance with its obligations under the Civil Procedure Act 2010 (Vic) ('CPA'). In this regard, the defendant relied on the following observations of McHugh J in La Qin,[12] where his Honour stated that this approach '...has been adopted in a large number of cases';

(c) third, the statutory demand that the defendant neglected to comply with gave the plaintiff an objectively reasonable basis to commence and maintain the Winding Up Proceeding, particularly where the Court 'must' presume that at the time of the discontinuance, the defendant was insolvent. The defendant did not file any evidence to the contrary or substantively engage in the proceeding in support of its s 459S application; and

(d) fourth, the chronology of events makes clear that the defendant has engaged in conduct contrary to ss 16, 21 and 26 of the CPA, a relevant consideration on the question of costs.

1. Each of the four grounds were further developed in the plaintiff's written submissions as follows.
2. As to the first ground, the plaintiff contended that the evidence establishes that in approximately July 2025 (seven months after the Winding Up Proceeding was commenced), supervening events pertaining to the sale of the Properties and the identification of allegedly invalid FS Trust documents resulted in the dispute between the parties shifting from the Winding Up Proceeding to the Trust Proceeding. The plaintiff contended that this is a relevant consideration on the question of costs where the Winding Up Proceeding has been rendered unnecessary by circumstances beyond the plaintiff's control. The Trust Proceeding will proceed via writ and the debt which is the subject matter of the statutory demand will form the subject of the plaintiff's relief.
3. The surrounding circumstances, it was submitted, make plain that the dispute between the parties at the time of the filing of the notice of discontinuance was substantially different to that at the time the Winding Up Proceeding was commenced, as a result of:

(a) the defendant disposing of its primary asset, being the Properties, despite its director deposing that the FS Trust was established 'for the purpose of protecting multigenerational assets for the benefit of the [Stokie] family', which the Properties were the primary asset of; and

(b) evidence and instructions being obtained in July 2025 regarding the '19 October 2022 Deeds of Variation of Trust' and the 'Flinders Stokie Deed of Appointment and Resignation', that gave rise to the commencement of the Trust Proceeding.

1. In the Trust Proceeding, the plaintiff and Flindstoke sought declaratory relief in respect of the FS Trust. In that proceeding, it is alleged that:

(a) FS Trust documents that Luke and Brenton caused to be executed that retire the plaintiff from his role as the appointor and guardian of the FS Trust and appoint them to those roles are wholly invalid due to being improperly entered into; and

(b) Flindstoke is the trustee of the FS Trust.

1. The plaintiff also pointed to his solicitor's letter dated 21 July 2025, where, after commencing the Trust Proceeding, the plaintiff proposed that the Winding Up Proceeding be stayed until the hearing and determination of the Trust Proceeding. That letter also purported to put the defendant on 'express notice' that in light of the Trust Proceeding and the relief sought by it, on and from that time, the defendant was: (i) restrained from dealing with any assets of the FS Trust; (ii) did not have the plaintiff's authority to exercise any powers in connection with the Trust; and (iii) was unable to rely upon the assets of the FS Trust for the purposes of establishing its solvency. The plaintiff contended that where, by the Trust Proceeding, Flindstoke, a company of which the plaintiff is the sole director, seeks for the assets of the defendant to be vested in it, the final hearing could not conceivably proceed in circumstances where:

(a) the determination of the parties' respective interests in the Properties was a contested matter in the Trust Proceeding; and

(b) yet the defendant was seeking to rely on the Properties to establish solvency at the Winding Up proceeding.

1. In circumstances where the relief the plaintiff seeks by the Trust Proceeding pertains to the entitlement to assets that the defendant presently holds, the plaintiff contended that the defendant unreasonably withheld its consent to the proposed stay in July 2025.
2. On 3 June 2025, the defendant entered into a contract of sale for the Properties. The plaintiff submitted that the defendant intended to 'apply the sale proceeds to discharge its liabilities' which is inconsistent with the purpose of the FS Trust and the statutory and fiduciary obligations owed by the defendant to the beneficiaries of the FS Trust. The plaintiff contended that the defendant purposefully withheld from the plaintiff all information in respect of the defendant's purported liabilities until 13 August 2025, after the Winding Up Proceeding was discontinued.
3. The defendant's financials were provided as an enclosure to its solicitor's 13 August 2025 correspondence after the Winding Up Proceeding was discontinued. Those financials, it was submitted, made it clear why the defendant sought for the Winding Up Proceeding to be discontinued, as opposed to stayed. The plaintiff contended that this evidence was tactically withheld from the Court. The plaintiff further contended that an objective analysis of the circumstances in which the Winding Up Proceeding was discontinued evidences that the defendant took conscious steps to disrupt and render the Winding Up Proceeding futile by liquidating the company's assets for the purposes of 'discharging its liabilities', resulting in costs being significantly increased by the alleged unreasonable conduct.
4. As to the second ground, on 7 August 2025, Matthews J heard competing applications from the parties including an application whereby the defendant sought to have caveats lifted so that settlement of the Properties could proceed. The plaintiff applied to restrain the defendant from exercising powers in connection with the FS Trust and to restrain settlement of the sale of the Properties from proceeding.
5. On 7 August 2025, for the reasons set out in her Honour's ex tempore judgment, Mathews J ordered that the costs of Michael's application be costs in the cause of the Trust Proceeding. The plaintiff submitted that the Court ought make the same order for the Winding Up Proceeding:

(a) given the circumstances in which the Proceeding discontinued were ultimately out of the plaintiff's control;

(b) as there is no finality to the litigation, which is now the subject of the Trust Proceeding; and

(c) citing Course v Hannan & Ors[13] and Johnson v Clancy,[14] 'it will be impracticable to assess the eventual prospects of success in the action and... determine the question of costs'.

1. The plaintiff submitted that such an order would be consistent with the following observations of Burchett J in One.Tel Limited v Commissioner of Taxation:[15]

...it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs.

1. It was further contended by the plaintiff that:

(a) in circumstances where there has been no determination on the merits; and

(b) the plaintiff discontinued the Winding Up Proceeding in accordance with his overarching obligations of the CPA;

the Court ought to make orders consistent with those of Sloss J in Just Group Limited v van Dyke & Ors,[16] where the Court held:

...if the Court were to accede to the defendants' submission and make an award of costs against the plaintiff, it would be tantamount to punishing the plaintiff for acting responsibly in accordance with its obligations under the Civil Procedure Act. Accordingly, in the exercise of the Court's discretion, in the circumstances of this case, I do not propose to make any order of the kind sought by the defendants. It follows that no occasion arises to consider the making of an award of costs to the defendants on an indemnity basis.

1. As to the third ground, by his originating process filed 4 December 2024, the plaintiff sought orders pursuant to ss 459A and 459P of the Act, that the defendant company be wound in insolvency on the basis of its failure to comply with a statutory demand dated 30 October 2024. The plaintiff contended that the Winding Up Proceeding was reasonably commenced and maintained for the intended purpose of recovering the debt, as set out in the demand and not for any ulterior reason as asserted by the defendant. The plaintiff submitted that the assets of the defendant being in tangible form at the time the statutory demand was served and the Winding Up Proceeding commenced was irrelevant.
2. The 'Special Purpose Financial Report' ('Financial Report') completed for the defendant by its accountants was disclosed to the plaintiff on 13 August 2025 after the Winding Up Proceeding was discontinued and contrary to paragraph 3 of orders of the Court made 11 June 2025. In a letter sent by the plaintiff's solicitors on 24 September 2025 it was noted that:

... the Trust Special Purpose Financial Report for the period ended 31 March 2025 records a net loss of $647,058, with distributions nonetheless made to related entities, and, relevantly, records the loan payable to Michael Stokie in the amount of approximately $1.4 million, confirming that he is the [defendant's] principal creditor. These figures demonstrate that the [defendant] was insolvent and that our client's position as creditor required protection...

1. The Financial Report, it was submitted, is relevant to the question of costs given a relevant consideration is whether the plaintiff acted reasonably in commencing the Winding Up Proceeding and whether the defendant acted reasonably in defending them.
2. The plaintiff submitted that the Financial Report was telling as to why the defendant:

(a) neglected to file evidence in support of its s 459S application;

(b) did not comply with the Court orders dated 9 April 2025 or 11 June 2025 in relation to filing its evidence; and

(c) did not abide by its s 26 CPA discovery obligations.

1. Further, it was submitted that the Financial Report and the timing of disclosure evidences that the defendant's application pursuant to s 459S of the Act was unmeritorious and made without a proper basis, contrary to its obligations in ss 18, 23 and 26 of the CPA.
2. As to the fourth ground, as a result of the alleged change of circumstances, at the hearing on 7 August 2025, the plaintiff, by his counsel, undertook to discontinue the Winding Up Proceeding and in doing so acted in a manner consistent with the provisions of the CPA, in particular, the overarching purpose within s 7.
3. It was submitted that a lengthy, expensive and potentially traumatic Winding Up Proceeding had been avoided which is beneficial to all parties, as well as to the administration of justice more generally. It was further submitted that the course taken had effectively focused the parties' and Court's concentration on one proceeding. The plaintiff maintained that it was the defendant's conduct which necessitated the Winding Up Proceeding be discontinued with the 'battleground' between the parties shifting to the Trust Proceeding, rendering the Winding Up Proceeding futile.

1. The defendant submitted that the plaintiff ought to pay its costs of the discontinued Winding Up Proceeding for four reasons:

(a) first, the plaintiff acted unreasonably in commencing the Winding Up Proceeding. On the plaintiff's own evidence, the plaintiff never wanted the Properties to be sold, which would have been the inevitable result if the defendant were wound up in insolvency;

(b) second, it was in the defendant's interest to defend the Winding Up Proceeding, as an insolvent winding up would have led to the realisation and sale of the Properties in a distressed scenario, and the incurring of the costs of a liquidator in administering the winding up, to the detriment of the FS Trust beneficiaries;

(c) third, to the extent the Court is in a position to give some consideration to the merits of the Winding Up Proceeding, the defendant's grounds of opposition were clearly arguable and had strong prospects; and

(d) fourth, the reason why the Winding Up Proceeding was ultimately discontinued was because of the plaintiff's change of position in seeking to injunct the sale of the Properties, at a time when he remained plaintiff to the Winding Up Proceeding, where a sale of the Properties was, in substance, the relief he sought. The plaintiff's undertaking to discontinue the Winding Up Proceeding was the price of the limited injunction Matthews J ordered over the sale proceeds of the Properties.

1. In expanding on these arguments, the defendant submitted that the sale of the Properties was consistent with, and a necessary step, in prosecuting its solvency ground of opposition. To this end, it was submitted that it is trite that there is a distinction between solvency and a surplus of assets, and the ability of the company to convert its assets into cash within a relatively short time.[17] The sale of the Properties was not, as the plaintiff asserts, a 'supervening event'. Rather, it is the relief the plaintiff sought in the Winding Up Proceeding. The plaintiff's proposal that the Winding Up Proceeding be stayed was also inconsistent with the policy of Part 5.4 of the Act, as reflected in section 459R of the Act.[18]
2. Further, the plaintiff only undertook to discontinue the Winding Up Proceeding when it was pointed out that he had initiated parallel but inconsistent proceedings. The undertaking the plaintiff proffered was not, as submitted, pursuant to his CPA obligations. The defendant submitted that it was the price of the limited injunction awarded over the sale proceeds.
3. The defendant further submitted that the inconsistency in the parallel proceedings was and is reflected in Matthews J's ex tempore judgment handed down on 7 August 2025 in the Caveat Proceeding and Trust Proceeding, extracted as follows:

I just do not accept that on the one hand Michael can be seeking the winding up of the company - the inevitable result of which would be the sale of the Properties - and yet contend that the balance of convenience favours maintaining the caveat because the Properties are so special to him. I do not accept that the prospect of him discontinuing the winding up proceeding in any way changes my view about the balance of convenience because it does not change the fact that for some months now, he has been seeking the winding up of the company.[19]

1. The maintenance of inconsistent proceedings is an established ground of abuse of process.[20] The defendant submitted that if the plaintiff did not, by the Winding Up Proceeding, seek for the defendant to be would up in insolvency, (the inevitable result of which would be the sale of the Properties), it was not 'objectively reasonable' for him to commence a proceeding seeking that relief. It was an abuse of process.
2. The defendant further submitted that the conduct of the plaintiff in initiating the Winding Up Proceeding, and his conduct thereafter, warrant not only the Court ordering that the plaintiff pay the defendant's costs of the Winding Up Proceeding, but that they be paid on an indemnity basis.
3. The defendant submitted that the evidence before the Court demonstrated that the plaintiff commenced the Winding Up Proceeding for a purpose antithetical to the objects of Part 5.4 of the Act. The purpose of Part 5.4 of the Act is to bring about the speedy resolution of applications to wind up companies, with the focus at the hearing of a winding up application being whether or not a company is insolvent.[21] The defendant relied on the following matters as being demonstrative of the plaintiff's ulterior process constituting an abuse of process:

(a) the winding up in insolvency of the defendant was the precise outcome the plaintiff did not want;

(b) rather, the plaintiff sought, by the Winding Up Proceeding, to obtain control of the FS Trust, and in turn the Properties. The evidence of the plaintiff's intentions is set out in:

(i) his 16 December 2025 offer to resolve the Winding Up Proceeding on terms where he assumed control of the FS Trust;

(ii) his request for an undertaking from the defendant not to sell the Properties;

(iii) his commencement of the Trust Proceeding whilst the Winding Up Proceeding remained on foot;

(iv) his request that the Winding Up Proceeding be stayed pending determination of the Trust Proceeding;

(v) his conduct in causing Flindstoke to lodge meritless caveats over the Properties;

(vi) his conduct in seeking to injunct the sale of the Properties; and

(vii) his evidence filed in the injunction application of the special importance to him of the Properties such that damages would not be an adequate remedy. Such evidence was in the following terms:

Should the sale of the Properties proceed, and Flinders Stokie cause the foreshadowed Divestment of Trust Assets, I, Flindstoke and the beneficiaries of the Flinders Stokie Trust will suffer injury for which damages will not be an adequate remedy.

On or about 7 April 2021, as director of Flinders Stokie at the relevant time, I caused it as the (former) Trustee of the Trust to acquire the Property in accordance with the Trust Purpose. ([Affidavit of Giulio Marra filed in the Trust Proceeding on 7 August 2025] at [15]).

The purchase is particularly meaningful to me as I sold my family home to contribute to the purchase.

At all material times, the Properties have been held as the primary assets of the Trust and in accordance with the Trust Purpose, being to protect and preserve multigenerational assets for the benefit of the Stokie family.

I caused Flinders Stokie to the acquire the Property as I had identified the parcels of land which adjoin as unique, given the -

(a) Location, being adjacent to the golf course, a walk from the beach and conveniently located to the village shops.

(b) The Dwelling at now 8 Panton Rd, which includes 6 bedrooms, 2 bathrooms, kitchen/living/dining, rumpus room, powder room, laundry , pergola, outdoor covered entertaining area and a deck, which is enjoyed by the larger Stokie family.

(c) Properties' land parcel size. According to the Opteon Reports, the remaining abutting Properties have a combined land parcel size of 2,998sqm (6 Panton:1,582 sqm; 8 Panton: 1,416 sqm) which is unique for the Flinders area in respect of market availability.

(d) The vacant land at 6 Panton Rd is prime development opportunity. The vacant land may be developed to add to the value of the dwelling at 8 Panton Rd (as opposed to being sold) which can be enjoyed by the beneficiaries of the Trust for generations to come, in furtherance of the Trust Purpose.

(e) The Properties hold great sentimental value to me and the broader Stokie Family, save for Luke and Brenton Stokie. It is located in Flinders, which, through my family, I feel a deep connection. The land is also a physical representation and reminder of decades of hard work I have completed. Each time I attend the Property with my family and enjoy all the offerings and amenities it and the Flinders area offers, I feel a deep sense of happiness and accomplishment in observing the benefit my family obtain from it. Such sentimental value cannot be attributed to any alternate property as I would have no familial or personal connection or memories tied to it.

(collectively, the Properties' Benefits)

Since the Property has been acquired, the Stokie Family (which includes my wife Natasha Stokie and our broader family), have enjoyed the Benefits that the Properties offer. The Dwelling located on the Property serves as a holiday house for the Stokie family, who are beneficiaries of the Trust.

The benefit the Properties provide to the beneficiaries of the Trust and will continue to for generations to come is immeasurable in respect of any monetary sum. The Properties serve as a location where the Stokie Family can convene and bond as a family on special occasions, such as Christmas and Easter.

Should the Properties be sold, I and the beneficiaries of the Trust will suffer injury as we will lose the Property's Benefits and will be unable to use it for its intended Purpose.

Further, given the capital growth of real property in the Flinders/ Mornington Peninsula area, I do not have the financial capacity to cause any further acquisition of real property that is similar to the Properties. As well as having a deep connection to the unique land the Properties are situated on and the Benefits they provide, should the Properties be sold, the Stokie Family will be unable benefit from any real property held by the Trust in the manner in which the Properties are.

1. The analysis of who should pay costs in the Winding Up Proceeding is ultimately straightforward despite the parties filing voluminous submissions[22] and referring to a plethora of evidence filed in the Winding Up Proceeding, the Trust Proceeding and the Caveat Proceeding.
2. The usual order as to costs is that the party discontinuing, here the plaintiff, ought to pay the defendant's costs, subject to a contrary order. Both parties seek that I depart from the usual position, but do so for different reasons. This necessitates a consideration of the whole of the proceedings and the extensive material which has been referenced in submissions.
3. It is accepted that where proceedings are discontinued prior to any hearing on the merits, it will usually be impracticable to assess the eventual prospects of success in the action.[23] The plaintiff contends this is such a case. I reject that submission. This was not a case where some supervening event occurred such that the Court is unable to discern a clear reason why one party, rather than the other, should bear the costs.
4. Before me, there was compelling material that made the circumstances in which the plaintiff elected to discontinue the Winding Up Proceeding clear. The discontinuance occurred in circumstances where:

(a) well after instituting and continuing to press the Winding Up Proceeding, the plaintiff elected to commence the Trust Proceeding in which it sought patently inconsistent relief;

(b) in the course of the caveat removal and injunction hearing before Matthews J, in which the plaintiff undertook to discontinue the Winding Up Proceeding, Mathews J was critical and not accepting of the plaintiff's evidence;

(c) in her Honour's reasons, Matthews J held that:[24]

There needs to be some evidence that the property is irreplaceable or of special significance. And as I said, there is a variety of things relied upon in Michael's Affidavit. I do not find that evidence to be at all persuasive and I do not accept it. The reason for that is that that evidence is fundamentally incompatible with him having initiated a proceeding to wind up Flinders Stokie due to insolvency. In my view, it is inevitable that if a liquidator was appointed to Flinders Stokie then one of the things that the liquidator would be seeking to do would be to realise assets of the trust. It is also common ground that the main asset of the trust is the Properties in order to satisfy the trustees liabilities. I just do not accept that on the one hand Michael can be seeking the winding up of the company - the inevitable result of which would be a sale of the Properties - and yet contend that the balance of convenience favours maintaining the caveat because the Properties are so special to him. I do not accept that the prospect of him discontinuing the winding up proceeding in any way changes my view about the balance of convenience because it does not change the fact that for some months now, he has been seeking the winding up of the company.

(d) the findings and ruling of Matthews J in the caveat removal and injunction hearing are undisturbed;

(e) the chronology which emerged in the hearing before Matthews J also revealed that the defendant first put the plaintiff on notice on 23 August 2024 of their intention to sell the Properties. No injunction was sought and it was more than two months later that a statutory demand was served. On 3 June 2025, the Properties were sold. Again no injunction was sought. On 15 July 2025, with the Winding Up Proceeding still on foot and listed for final hearing before me on 6 October 2025, the plaintiff commenced the Trust Proceeding. On 31 July 2025, the defendant provided the plaintiff with a copy of the contract of sale of the Properties. Again, no injunction was sought. Rather, on and from 4 December 2024, and in the knowledge that the defendant intended to sell the Properties, the plaintiff pressed its Winding Up Proceeding and (together with Flindstoke) lodged four separate caveats over the Properties. By that Winding Up Proceeding, the plaintiff sought relief that would have had the effect of seeing the Properties sold;

(f) when faced with the defendant's 6 August 2025 application to remove the caveats, the plaintiff filed an injunction the same day seeking to stop the settlement of the sale of the Properties. In the hearing that followed before Matthews J, where the wholly inconsistent positions taken in the Winding Up Proceeding as opposed to the Trust Proceeding were the subject of her Honour's critical observations, the plaintiff in effect capitulated and elected to discontinue the Winding Up Proceeding. There is nothing in evidence before me from which I could conclude that the step to discontinue was undertaken pursuant to the plaintiff's CPA obligations as asserted. If that were the case, the Winding Up Proceeding ought to have been discontinued (at the latest) immediately upon the filing of the Trust Proceeding. It is for this reason, I consider that the plaintiff's conduct in continuing to press the Winding Up Proceeding after the filing of the Trust Proceeding warrants an order that indemnity costs be payable from the date the Trust Proceeding was filed.

1. I am fortified in my view concerning the making of an order for indemnity costs by reason of the plaintiff's proposal to stay the Winding Up Proceeding and his insistence that this proposal somehow validated the correctness or merit of the plaintiff's position. The insistence that the Winding Up Proceeding be stayed does the opposite and I reject the plaintiff's submission.
2. Section 459R of the Act provides:

(1) An application for a company to be wound up in insolvency is to be determined within 6 months after it is made.

(2) The Court may by order extend the period within which an application must be determined, but only if:

(a) the Court is satisfied that special circumstances justify the extension; and

(b) the order is made within that period as prescribed by subsection (1), or as last extended under this subsection, as the case requires.

(3) An application is, because of this subsection, dismissed if it is not determined as required by this section.

1. In seeking a winding up of a company in insolvency under ss 459A and 459P of the Act, the applicant seeks an order not for his or her benefit, but for the benefit of creditors or a class of creditors of which he or she is a member.[25] The right to apply to wind up in insolvency is a representative right, and, at least generally speaking, the interests of all creditors are to be taken into account when deciding on the desirability of winding up.[26]
2. The Explanatory Memorandum which accompanied the Bill that ultimately became the Corporate Law Reform Act 1992 (Act No 210 of 1992) (which inserted the present Part 5.4 (ss 459A-459T) in the then 'Corporations Law', now the Act, provided the following in relation to the proposed section 459R:

An application for a company to be wound up in insolvency is to be determined within six months after it is made (proposed subsection (1)). This is designed to ensure that decisions on a company's solvency are based on contemporaneous information. In relation to a statutory demand, for example, it would be inappropriate to order the winding up of a company on that basis on [sic - of] non-compliance with a statutory demand made years ago. (para 712).

The period of three months referred to in sub‑section 459C(2) and the period of six months referred to in sub-section 459R(1) represent the legislature's definition of 'contemporaneity' for this purpose.

1. As Hamilton J observed in Expile Pty Ltd v Jabb's Excavations Pty Ltd,[27] there are other obvious policy reasons for seeking contemporaneity in orders under s 459R of the Act including:

(a) protecting persons or companies from trading or engaging with a company that might be insolvent and continuing to trade and incur debts; and

(b) the very existence of proceedings to wind up a company, particularly on grounds of insolvency, are subject to public recording via the lodgement of a notification to the Australian Securities and Investments Commission, the very fact of which may do irreparable damage to the company's reputation, to its capacity to raise capital for its continued operations, to the value of its shares and the interests of its shareholders, officers and employees. Companies that ought not be wound up should not be subject to the uncertainty and potential damage that may be caused by the mere existence of a winding up proceeding which hangs over it for a prolonged period of time.

1. There is much force in the defendant's submission, which I accept, that the proposed stay of the Winding Up Proceeding neither conformed with the legislative intent nor was it demonstrative of a party seeking a winding up order for the broader benefit of creditors or a class of creditors of which he or she is a member.
2. The defendant also urged on me that I should find that the maintenance of inconsistent proceedings constituted a ground of abuse of process.
3. It is well accepted that '[a]n abuse of process in the technical sense occurs when a party institutes proceedings "for a purpose or to effect an object beyond that which the legal process offers".[28] Put another way, there will be an abuse of process if the plaintiff's purpose in bringing the Winding Up Proceeding was not to prosecute it to a conclusion but to use it as a means of obtaining some advantage for which it was not designed or some collateral advantage beyond what the law offers.[29] The legislative scheme provides that a creditor who has served a statutory demand which remains unsatisfied for the statutory period has a right to seek winding up. It is well accepted that unless the recipient of the statutory demand enlivens Division 3 of Part 5.4 of the Act and applies to set aside the statutory demand on the basis that is has a genuine dispute about the existence or amount of the debt or any off-setting claim, it is perfectly legitimate for the creditor to proceed with a winding up application even though such a dispute or off-setting claim may in fact exist.[30]
4. Having regard to the evidence before me, I cannot conclude that the plaintiff acted unreasonably in commencing the Winding Up Proceeding for such a purpose. That is to say, I am unable to conclude that the Winding Up Proceeding was commenced in order to obtain some advantage beyond what the law offers. I have reached this view by reference to the relevant chronology namely that:

(a) the statutory demand was issued on 30 October 2024 and was not complied with. There was no application made to set it aside leaving the plaintiff with the benefit of a presumption of insolvency in its favour to proceed with a winding-up application;

(b) on 17 April 2025, the defendant made an application pursuant to s 459S of the Act. Orders were subsequently made requiring that the defendant file evidence of solvency by 11 June 2025, which was later extended to 23 July 2025; and

(c) it was on 15 July 2025 that the Trust Proceeding was commenced.

1. However, from the time when the Trust Proceeding was commenced, and having regard to the plaintiff's evidence filed in respect of the injunction application concerning the alleged special importance to him of the Properties such that damages would not be an adequate remedy, I am satisfied that the maintenance of the Winding Up Proceeding after the filing of the Trust Proceeding was improper such as to justify an award of indemnity costs on and from that date. In so concluding, I need not make a finding as to whether the maintenance of the Winding Up Proceeding constituted an abuse and it would be difficult to do so without a hearing on the merits as to that particular point. However, it is sufficient to observe that the very fact of the two parallel proceedings in which inconsistent relief was being sought was prima facie vexatious and oppressive, and relevantly on the question of costs, contrary to the CPA.
2. Finally, I note that the plaintiff's written submissions were replete with pejorative statements as to the alleged reasonableness of the plaintiff's conduct. Those submissions were not supported by the evidence before me. The discretion in respect of costs will be exercised on the basis of the objective circumstances established on the evidence and not the subjective considerations of one party.

(a) the plaintiff pay the defendant's costs of the proceeding, including any reserved costs:

(i) on a standard basis from the commencement of the proceeding on 4 December 2024 until the date on which the Trust Proceeding was commenced being 15 July 2025; and

(ii) on an indemnity basis from 16 July 2025,

[1] Supreme Court Act 1986 (Vic), s 24; Civil Procedure Act 2010 (Vic), s 65C.

[2] Innes-Irons & Anor v Forrest (Costs) [2017] VSC 10, [5] (Derham AsJ); Towercom Pty Ltd v Fahour (No 4) [2013] VSC 585, [6] (Derham AsJ) ('Towercom'); Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; _Oshlack v Richmond River Counci_l [1998] HCA 11; (1998) 193 CLR 72, 86 (Gaudron and Gummow JJ) ('Oshlack').

[3] See Towercom (n 2); Ritter v Godfrey [1920] 2 KB 47, 53 (Atkin LJ); Donald Campbell & Co Ltd v Pollak [1927] AC 732, 809 (Viscount Cave LC); Milne v Attorney-General (Tas) [1956] HCA 48; (1956) 95 CLR 460, 477 (Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ); Oshlack (n 2).

[4] [2025] VSCA 67.

[5] [2015] VSC 363.

[7] Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 (Burchett J); Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 (Harper J); Yap v Lee [2019] VSC 743 (McDonald J).

[8] J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) [1993] FCA 70; (1993) 46 IR 301.

[9] Ballam v Ferro (No 2) [2022] NSWSC 1358, [68] (Hallen J), citing Vector Corrosion Technologies Ltd v E-Chem Technologies Ltd [2022] FCA 519, [38] (Jagot J).

[10] Banksia Securities Ltd v Insurance House Pty Ltd (Costs) [2020] VSC 234, [15] (Dixon J); Winslow Constructors Pty Ltd v Head, Transport for Victoria (Costs) [2021] VSC 74; (2021) 64 VR 200, 204 (Riordan J).

[11] Specialist Australian Security Group Pty Ltd (in liq) v Onwatch Pty Ltd [2017] VSC 184, [43] (Elliott J).

[12] Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, 624-625 (McHugh J); see also Just Group Limited v van Dyk & Ors [2016] VSC 66, [30].

[13] [2018] VSC 401, [12].

[14] [2010] NSWSC 1301, [21].

[15] [2000] FCA 270; (2000) 101 FCR 548, 553.

[16] [2016] VSC 66.

[17] Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728, [44].

[18] Badenoch Integrated Logging Pty Ltd v Bryant (2024) 306 FCR 529; 539-540 (O'Callaghan, McEvoy and Neskovcin JJ).

[19] Transcript of Proceedings, (Supreme Court of Victoria, S ECI 2025 03998 and S ECI 2025 04469, Matthews J, 7 August 2025), 85.18-85.27.

[20] Henry v Henry [1996] HCA 51; (1996) 185 CLR 571, 591 (Dawson, Gaudron, McHugh, and Gummow JJ).

[21] Aussie Vic Plant Hire Pty Ltd v Esanda Finance Corporation Ltd [2008] HCA 9; (2008) 232 CLR 314, 323 (Gleeson CJ, Hayne, Crennan and Kiefel JJ).

[22] The defendant filed 33 pages of submissions and related material in support of its position and a further 2 pages of submissions in reply.

[23] Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 44 FCR 194, 201 (Hill J); Liberty Oil Convenience Pty Ltd v Golden Roo Company Ltd [2024] FCA 747, [11] (Wigney J).

[24] Transcript of Proceedings, (Supreme Court of Victoria, S ECI 2025 03998 and S ECI 2025 04469, Matthews J, 7 August 2025), 85.4-85.28.

[25] Mercantile Credits Ltd v Foster Clark (Australia) Ltd [1964] HCA 66; (1964) 112 CLR 169, 174-175.

[26] Expile Pty Ltd v Jabb's Excavations Pty Ltd [2002] NSWSC 851; (2002) 194 ALR 138, [58]-[59].

[27] [2002] NSWSC 851; (2002) 194 ALR 138, 141.

[28] Hardel Property Holdings [2008] FCA 22; (2008) 26 ACLC 122, 123, citing Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509, 523 (Finn J).

[29] Williams v Spautz [1992] HCA 34; (1992) 174 CLR 509.

[30] State Bank of New South Wales v Tela Pty Ltd (No 2) [2002] NSWSC 20; (2002) 188 ALR 702, 705 [9]-[12].