The Court of Appeal (President Maxwell, Justice McLeish and Justice Keogh) today allowed an appeal by a solicitor, John Gdanski, against a non-party costs order which had been made against him at the conclusion of proceedings in the Trial Division.

Mr Gdanksi acted for a company which had initiated a proceeding against Palms Court Management Pty Ltd (‘Palms’). He was also a director and, through an associated entity, a shareholder in and creditor of that company. The proceeding was discontinued. The plaintiff company, being insolvent, was unable to meet an order for costs. Palms sought, and was awarded, a non-party costs order against Mr Gdanski. 

The judge concluded that Mr Gdanski had been the ‘real party’ to the litigation, because he had played an active role in the litigation and because he stood to benefit from the payment of legal fees. It was therefore in the interests of justice that he pay Palms’ costs.

His Honour took into account various adverse findings he had made against Mr Gdanski concerning his performance as a solicitor in the litigation.

The Court of Appeal held that it was not open to the judge to find that Mr Gdanski was the ‘real party’ to the litigation. The Court held that Mr Gdanski’s active role in the litigation was consistent with his fiduciary duties as, respectively, director of and solicitor to the company. 

In relation to his interest in the litigation, the Court held that the earning of professional fees was immaterial. Further, the Court affirmed the judge’s finding that there was nothing exceptional about Mr Gdanski’s interest as shareholder and creditor.  

Finally, the Court of Appeal held that none of the adverse findings against Mr Gdanski should have been made. 

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NOTE:  This summary is necessarily incomplete. It is not intended as a substitute for the Court’s reasons or to be used in any later consideration of the Court’s reasons.  The only authoritative pronouncement of the Court’s reasons and conclusions is that contained in the published reasons for judgment.

Read the Court's full judgment on AustLII (External link)

Author
Supreme Court of Victoria
Publisher
Supreme Court of Victoria
Date of Publication

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